Nobody’s making money in mobile… yet

Mobile talk once again zeroes in on iPhone, king of a big market still without big money

Saying something more does not make it truer. But let’s just say it, all together, one more time: very few app developers are raking in the millions for their mobile products.

Moderator Mark Newhall, co-founder of IdealWave Solutions, grilled a panel of tech industry experts today in a short session at the seventh edition of the AlwaysOn & STVP Summit at Stanford, asking the hard-hitting question: everyone predicts big money coming from exploding usage of smartphone applications, but has that big money arrived yet?

Echoing the resounding “no” of the whole panel, Matt Murphy of Kleiner Perkins Caufield & Byers said, “I don't think anybody's making big money right now.” Not at all saying that the big money is and always will be a fantasy, Murphy only wanted to make it clear that “it's really early days right now" in the world of mobile applications.

At the same time, some of the most popular apps do indeed bring in revenue.

Bart Decrem, founder and CEO of Tapulous (developer of the wildly popular Tap Tap Revenge series), says that social gaming companies on the iPhone, in particular, have already tapped into a profitable market. Speaking for his own company—angel-funded and manned by just 12 employees—Decrem says Tapulous already brings in millions of dollars a month with revenue doubling every few months.

If Decrem’s numbers are right, then apparently the App Store isn’t just all noise. Simon Khalaf, CEO of mobile application analytics company Flurry, emphasized that an app has to hit the “Top 25” to see revenue that matches Tapulous, though. For an app that costs about $100,000 to develop, he said, making it to the “Top 25” through a half million to 700,000 downloads will make it worthwhile.

According to Khalaf, the Apple App Store is growing 25 times faster than the iTunes Store, or seven times faster if you don’t count all the free apps. Either way, it’s clear that the iPhone is the number one sophisticated mobile device to design for right now. As Murphy said, “The epicenter of activity is on the iPhone.”

After the iPhone, Mozes CEO Dorrian Porter believes that Google’s Android is the next most convenient platform to pursue. Less noisy than the App Store, developers have a better chance of being discovered there.

Purnima Kochikar, VP of the Nokia Community & Developer Forum, expressed some impatience with the current iPhone obsession, introducing herself with the statement, "I feel like a foreign exchange student at this iPhone lovefest.” Though she got a few laughs from the audience, she definitely appeared the most outlying figure on the panel with her emphasis on Nokia’s specialty: feature phones. Though feature phones obviously dominate the global market right now, it’s clear that the world is moving towards device sophistication.

Acknowledging that it’s all about the iPhone right now, Decrem doesn’t think this will always be the case. As smartphones become increasingly popular, competitors like the Palm Pre and Google Android products will be able to match Apple’s power, as long as they provide the right innovation.

Some are already saying that the app-model, currently Apple’s most attractive feature, will not last long. As mobile browsers become more powerful, Murphy envisions apps built-in to the Web, with “app wrappers” to make them seamless and easy to use. Monetization of such a model might make more sense, too, as advertising through browsers could be easier to implement and analyze.

Nevertheless, it is still quite clear that developers will at some point see big money from the smartphone market, one still continuously seeing massive amounts of innovation and disruption.